If the massive share slump of Paytm shares, RBI’s ban on Paytm payments bank, and founder Vijay Shekhar Sharma losing billionaire status weren’t enough, another problem has mounted for Paytm.
Chinese billionaire Jack Ma’s Alibaba Group, which is one of the early investors of Paytm’s online shopping arm Paytm Mall, has exited the e-commerce company. Another investor Ant Financials has exited too. This comes amidst Paytm Mall’s plan to focus on its transition to India’s Open Network Digital Commerce (ONDC).
According to reports, Alibaba and Ant Financials have sold their 43% stake in Paytm Mall for a massive amount of ₹42 crore. It is also reported that the company’s valuation has dropped from $3 billion in 2020 to $13 million (about ₹100 crore) now. Last year, Paytm Mall’s valuation had dropped below $1 billion in 2021 as noted by Hurun Global Unicorn Index.
According to data from Tracxn and as stated in an ET report, Alibaba owned close to 25.6% stake in Paytm Mall, with Japanese-conglomerate Softbank holding another 18% and Paytm founder Vijay Shekhar Sharma owning 8.2% stake in the entity.
Following these exit reports, Paytm Mall has said in a statement that the exit price of any investors in the company via capital reduction process is not reflective of the valuation of the company.
“One simple metric is to consider that our cash balance itself is significantly higher than the quoted number in media reports, which establishes that the suggested low Fair Market Valuation is completely inaccurate,” said a Paytm Mall spokesperson who did not share the current valuation of Paytm Mall, as per a report in the Hindu Business Line.
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Paytm Mall’s ONDC Push
“As part of the shift in the business direction of the company, PEPL (Paytm E-commerce) also saw the exit of early investors,” said a spokesperson of Paytm Mall, which is a privately-held entity, independent of publicly-listed fintech major Paytm, as per a report in TheHinduBusinessLine.
As per the ET report, a Paytm Mall spokesperson said “We are set to build on the revolutionary ONDC programme by the Government of India to drive online commerce in India. We also plan to explore opportunities in the export market. We are grateful for the support of our investors and look forward to driving sustainable growth.”
Paytm Mall had reportedly raised $200 million from Alibaba in 2017 at around $1 billion valuation. Overall, the company is estimated to have raised over $800 million in capital from Alibaba, Ant Financial, SoftBank, and eBay, among others. The company is said to soon hold an extraordinary general meeting on May 23, 2022.
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